MoviePass downgrades all subscribers to just three movies per month

Plagued by scandal and struggle, only time will tell how much longer the company can stay afloat

Come August 15th, MoviePass will begin restricting users to just three movies per month – a far cry from the “one-a-day” customers were initially promised.

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The subscription-based service for movie-goers was founded in 2011 to much fanfare from enthusiasts, however, critics and cinema owners such as AMC and Cinemark were far less welcoming.

From the onset, business pundits and industry analysts lambasted MoviePass’ initial business model of charging subscribers just $15 – $50 per month to see a virtually unlimited number of feature films. Many theater owners suggested such a move would severely devalue movie tickets as customers get used to paying cents on the dollar to see Hollywood blockbusters. Movie business analysts, on the other hand, suggested MoviePass had a failed business model simply because it would never address its dire profit to loss ratio.

Analysts were even more dumbfounded last year when Mitch Lowe – the company’s CEO – decided to abandon the tiered pricing structure in favor of a flat rate of $9.95 per month. Interestingly, the move resulted in a huge spike in new customers – jumping from several tens-of-thousand to over one million paid subscribers. Nevertheless, opponents of the price cut showered MoviePass with condemnation – some predicted an enviable bankruptcy, while others went even further and suggested the company was, in fact, a scam.

Again, much of the criticism stems from Lowe’s inability to articulate exactly how MoviePass is to become profitable. For example, in many of the country’s metropolitan areas such as New York, Los Angeles, and Washington D.C., movie tickets can cost anywhere from $15 or more – in some cases surpassing $20. Since MoviePass’ monthly price is less than the cost of a single ticket, critics are wondering how can the company survive?

It seems, according to Lowe, the answer is to restrict subscribers access to just three movies per month. Lowe argues that only a small fraction of MoviePass’ customers will be negatively impacted because the vast majority of subscribers already see three or fewer flicks every month. Luckily, people who’ve already paid for long-term yearly subscriptions will be unaffected until their service expires.

Just weeks before this latest announcement, several outlets reported that customers’ cards were “down” because the company temporarily lacked the funds to pay theaters. Only time will tell how much longer the company can stay afloat.